Correlation Between Travelzoo and Marchex
Can any of the company-specific risk be diversified away by investing in both Travelzoo and Marchex at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Travelzoo and Marchex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Travelzoo and Marchex, you can compare the effects of market volatilities on Travelzoo and Marchex and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Travelzoo with a short position of Marchex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelzoo and Marchex.
Diversification Opportunities for Travelzoo and Marchex
Modest diversification
The 3 months correlation between Travelzoo and Marchex is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Travelzoo and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex and Travelzoo is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Travelzoo are associated (or correlated) with Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of Travelzoo i.e., Travelzoo and Marchex go up and down completely randomly.
Pair Corralation between Travelzoo and Marchex
Given the investment horizon of 90 days Travelzoo is expected to under-perform the Marchex. But the stock apears to be less risky and, when comparing its historical volatility, Travelzoo is 1.22 times less risky than Marchex. The stock trades about -0.21 of its potential returns per unit of risk. The Marchex is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 137.00 in Marchex on February 27, 2024 and sell it today you would earn a total of 5.00 from holding Marchex or generate 3.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Travelzoo vs. Marchex
Performance |
Timeline |
Travelzoo |
Marchex |
Travelzoo and Marchex Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Travelzoo and Marchex
The main advantage of trading using opposite Travelzoo and Marchex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelzoo position performs unexpectedly, Marchex can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Marchex will offset losses from the drop in Marchex's long position.Travelzoo vs. Mirriad Advertising plc | Travelzoo vs. INEO Tech Corp | Travelzoo vs. Entravision Communications | Travelzoo vs. Cimpress NV |
Marchex vs. Mirriad Advertising plc | Marchex vs. INEO Tech Corp | Marchex vs. Entravision Communications | Marchex vs. Cimpress NV |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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